Rlj Lodging Trust · NYSE:RLJ

Rlj Lodging Trust — Merger or Acquisition (May 2017)

46 slides from Rlj Lodging Trust's merger presentation, May 2017

  1. Slide 1: Updated Investor Presentation

    Updated Investor Presentation May 2017 RLJ and FelCor Combination Creates Preeminent Focused-Service and Compact Full-Service Lodging REIT

  2. Slide 2: Transaction Overview

    Transaction Overview  100% stock-for-stock combination of RLJ Lodging Trust (“RLJ”) with FelCor Lodging Trust (“FelCor” or “FCH”) ‒ 0.362x fixed exchange ratio (0.362 RLJ shares issued for each FCH share) Transaction ‒ Pro forma ownership of 71% RLJ / 29% FCH Details ‒ RLJ will be the surviving pub

  3. Slide 3: Compelling Merger and Investment Opportunity

    Compelling Merger and Investment Opportunity Transformational combination to result in a dominant platform in the most profitable hotel segments with imbedded growth and value creation opportunities  High quality institutional-grade portfolio of high margin focused-service & compact full-service ho

  4. Slide 4: Accretive Transaction with Long-Term Upside

    Accretive Transaction with Long-Term Upside Expected to be Accretive to Shareholders in First Full Year and Beyond All-stock transaction which allows all shareholders to participate in the upside Near Term Opportunities Opportunities Over Time • Earnings Accretive • Operating Improvements – Expected

  5. Slide 5: Strategic Combination / Natural Fit

    Strategic Combination / Natural Fit 5

  6. Slide 6: RLJ's Focused-Service / Compact Full-Service Strategy

    RLJ’s Focused-Service / Compact Full-Service Strategy RLJ’s strategy focuses on premium branded, upscale focused-service and compact full-service hotels that generate RevPAR similar to traditional full-service but with higher margins  Hotel Type: Target efficient upscale focused-service and upper u

  7. Slide 7: RLJ's Unique Strategy Focuses on the Most Profitable Part of Spectrum

    RLJ’s Unique Strategy Focuses on the Most Profitable Part of Spectrum RLJ Investment Focus Category Focused-Service Full-Service Budget & (Upscale Limited-Service Compact Traditional Convention / Economy Boutique Luxury / Urban Locations) Full-Service Full-Service Resorts Level of Service Level of S

  8. Slide 8: FelCor's Compact Hotels are a Natural Fit with RLJ's Strategy

    FelCor’s Compact Hotels are a Natural Fit with RLJ’s Strategy FelCor Hotel Portfolio (# Hotels) 2016A Hotel EBITDA Margin 30 (2) 36% 34% Marriott, Doubletree & Other Wyndham Embassy Suites 6 FelCor Compact (1) FelCor Traditional FelCor Compact Full-Service Hotels (1) RLJ Full-Service Hotels Full-Ser

  9. Slide 9: FelCor Enhances RLJ's Focused-Service and Compact Full-Service Strategy

    FelCor Enhances RLJ’s Focused-Service and Compact Full-Service Strategy Pro forma RLJ balances EBITDA from its focused-service and compact full-service hotel portfolio RLJ Today Pro Forma RLJ Compact Compact Focused-Service Focused-Service Full-Service Full-Service % of 2016A Hotel EBITDA (1) 73% 23

  10. Slide 10: RLJ's Unique Strategy Generates Significantly Higher Margins Than Peers

    RLJ’s Unique Strategy Generates Significantly Higher Margins Than Peers RLJ Investment Focus Category Full-Service Focused-Service Budget & (Upscale Limited-Service Economy Compact Traditional Convention / / Urban Locations) Luxury Boutique Full-Service Full-Service Resorts Level of Service Level of

  11. Slide 11: FelCor Owns a Portfolio of High-Quality Hotels

    FelCor Owns a Portfolio of High-Quality Hotels FelCor’s portfolio consists of high-quality assets in major urban and densely developed markets • High RevPAR and high margin assets well positioned in attractive markets (Los Angeles, San Francisco, Boston, etc.) • Well maintained portfolio; FelCor sig

  12. Slide 12: FelCor's Portfolio Advances RLJ's Premium Brand Strategy

    FelCor’s Portfolio Advances RLJ’s Premium Brand Strategy Combination advances premium brand strategy and creates well-balanced diversification across Marriott, Hilton, Hyatt and Wyndham brands Brand Mix (1) RLJ FelCor (2) RLJ + FelCor Combined (2) Other Other Other 7% 2% InterContinental 5% Hyatt Hy

  13. Slide 13: FelCor's Portfolio Complements RLJ's Target Markets

    FelCor’s Portfolio Complements RLJ’s Target Markets FCH’s portfolio significantly expands RLJ’s existing strong presence in California (31% of FCH rooms), Florida (16% of FCH rooms), and the Northeast Corridor   RLJ  FCH  % of Rooms     16% of    = > 5.0%        Total     

  14. Slide 14: FelCor's Portfolio Enhances RLJ's Presence in Gateway Markets

    FelCor’s Portfolio Enhances RLJ’s Presence in Gateway Markets FelCor’s portfolio significantly enhances RLJ’s presence in the target markets such as California and Boston, while also reducing overall market specific earnings volatility and risk % of 2016A EBITDA (1) Combined Ranking # Market RLJ RLJ

  15. Slide 15: FelCor's Compact Hotels are a Natural Fit with RLJ's Strategy

    FelCor’s Compact Hotels are a Natural Fit with RLJ’s Strategy Investment Criteria  Less square footage, limited meeting space and Compact Hotels  food and beverage outlets  34% compact full-service margin (1) High Hotel EBITDA Margins   32% margin overall High Percentage of Revenues from Room P

  16. Slide 16: Combination Creates Third Largest Public Lodging REIT

    Combination Creates Third Largest Public Lodging REIT Enhanced size and efficiency allow for significant cost savings • Meaningful overhead (G&A) efficiencies • Increased negotiating leverage with brands, managers, and vendors • Ongoing cost-of-capital efficiencies (refinancing FelCor debt, greater

  17. Slide 17: Creates Leading Lodging Platform

    Creates Leading Lodging Platform RLJ + FelCor RLJ FelCor Combined Equity Value $3.0bn $1.2bn (1) $4.2bn (1) Enterprise Value $4.1bn $2.9bn (1) $7.0bn (1) Number of Hotels 122 36 (2) 158 (2) Number of Rooms 20,138 11,044 (2) 31,182 (2) 2016A RevPAR $130 $148 (2)(3) $136 (2)(3) 2016A Hotel EBITDA $400

  18. Slide 18: Imbedded Value Creation Opportunities

    Imbedded Value Creation Opportunities 18

  19. Slide 19: Opportunity for Continued Portfolio Improvements

    Opportunity for Continued Portfolio Improvements RLJ intends to follow its proven investment thesis in reshaping the combined portfolio • Continue to improve efficiency by recycling into hotels with higher EBITDA per key • Opportunity to continue to drive our combined portfolio of upscale, urban foc

  20. Slide 20: Opportunity to Harvest Imbedded Portfolio Value

    Opportunity to Harvest Imbedded Portfolio Value  RLJ has completed nine award-winning conversions  FelCor Conversion Candidates: ‒ Embassy Suites Mandalay Beach to Curio Brand ‒ Embassy Suites Deerfield Beach to Hilton or Curio Conversions ‒ Sheraton Philadelphia Society Hill to Marriott  RLJ own

  21. Slide 21: Strong Balance Sheet and Liquidity

    Strong Balance Sheet and Liquidity 21

  22. Slide 22: Strong Balance Sheet and Proactive Deleveraging Plan

    Strong Balance Sheet and Proactive Deleveraging Plan Flexibility to accretively delever through select hotel sales over next 12 to 18 months • RLJ plans to opportunistically monetize $300 - $500+ million in hotels to accretively delever the balance sheet – Initially targeting repayment of FelCor’s $

  23. Slide 23: Strong Ongoing Liquidity

    Strong Ongoing Liquidity RLJ’s liquidity remains strong with over 129 unencumbered hotel assets as well as an untapped $400 million revolver and interest coverage of over 4.0x; supported by $4 billion of equity value Enterprise Value Pro Forma Debt Maturity Schedule (1) Pro Forma Liquidity • Weighte

  24. Slide 24: Wyndham Guaranty Provides Credit Enhancement

    Wyndham Guaranty Provides Credit Enhancement Description Wyndham EBITDA Guaranty (in mm’s) (2) • Eight recently renovated Wyndham hotels located in key gateway markets with strong demand generators • Backed by a $100 million NOI guaranty through 2022 $69.6 ($85 million remaining)(1) capped at $21.5

  25. Slide 25: Proven Track Record

    Proven Track Record RLJ | Lodging Trust 25

  26. Slide 26: RLJ Has a Proven Record of Successful Portfolio Management

    RLJ Has a Proven Record of Successful Portfolio Management • Leading shareholder returns – 70% total shareholder return since May 2011 IPO (fifth best among public lodging REITs) – Returned ~$1 billion to shareholders in dividends and share repurchases since May 2011 IPO • Disciplined, active hotel

  27. Slide 27: Proven Track Record of Delivering Leading Shareholder Returns

    Proven Track Record of Delivering Leading Shareholder Returns RLJ’s disciplined, active portfolio management has generated leading shareholder returns since its May 2011 IPO Total Returns Since RLJ’s IPO (May 2011) 100% 96% 86% 80% 80% 70% 71% 60% 60% 40% 32% 31% 24% 24% 20% 18% 3% 0% Hersha Ashford

  28. Slide 28: Compelling Investment Opportunity

    Compelling Investment Opportunity 28

  29. Slide 29: Pro Forma Portfolio Positioned To Outperform

    Pro Forma Portfolio Positioned To Outperform Improved RevPAR and Efficiency Pro Forma Geographical Overview RevPAR Accretive (1) RLJ   $136 FCH  $130               Opportunity for              future RevPAR and                          

  30. Slide 30: Compelling Merger and Investment Opportunity

    Compelling Merger and Investment Opportunity Transformational combination to result in a dominant platform in the most profitable hotel segments with imbedded growth and value creation opportunities  High quality institutional-grade portfolio of high margin focused-service & compact full-service ho

  31. Slide 31: FelCor Portfolio Detail

    FelCor Portfolio Detail RLJ | Lodging Trust 31

  32. Slide 32: FelCor's Compact Full-Service Hotel Summary

    FelCor’s Compact Full-Service Hotel Summary 32

  33. Slide 33: FelCor's Compact Full-Service Hotel Summary

    FelCor’s Compact Full-Service Hotel Summary Embassy Suites Embassy Suites Embassy Suites Napa Valley San Francisco Airport Waterfront Milpitas Silicon Valley  Rooms: 205  Rooms: 340  Rooms: 266  2016A RevPAR: $196  2016A RevPAR: $187  2016A RevPAR: $165  2016A Margin: 41.2%  2016A Margin: 34

  34. Slide 34: FelCor's Compact Full-Service Hotel Summary (cont'd)

    FelCor’s Compact Full-Service Hotel Summary (cont’d) Embassy Suites Embassy Suites LA Embassy Suites Fort Lauderdale 17th Street International Airport South Phoenix Biltmore  Rooms: 361  Rooms: 349  Rooms: 232  2016A RevPAR: $146  2016A RevPAR: $146  2016A RevPAR: $123  2016A Margin: 33.3% 

  35. Slide 35: FelCor's Compact Full-Service Hotel Summary (cont'd)

    FelCor’s Compact Full-Service Hotel Summary (cont’d) Embassy Suites Embassy Suites Embassy Suites Birmingham Boston Marlborough Minneapolis Airport  Rooms: 242  Rooms: 229  Rooms: 310  2016A RevPAR: $107  2016A RevPAR: $118  2016A RevPAR: $118  2016A Margin: 36.8%  2016A Margin: 30.2%  2016

  36. Slide 36: FelCor's Compact Full-Service Hotel Summary (cont'd)

    FelCor’s Compact Full-Service Hotel Summary (cont’d) Wyndham Wyndham Wyndham Boston Beacon Hill Santa Monica Beach at The Pier New Orleans French Quarter  Rooms: 304  Rooms: 132  Rooms: 374  2016A RevPAR: $181  2016A RevPAR: $240  2016A RevPAR: $106  2016A Margin: 41.8%  2016A Margin: 55.0%

  37. Slide 37: FelCor's Compact Full-Service Hotel Summary (cont'd)

    FelCor’s Compact Full-Service Hotel Summary (cont’d) Wyndham Wyndham Houston Holiday Inn San Francisco- San Diego Bayside Medical Center Hotel & Suites Fisherman’s Wharf  Rooms: 600  Rooms: 287  Rooms: 585  2016A RevPAR: $118  2016A RevPAR: $111  2016A RevPAR: $182  2016A Margin: 29.6%  2016

  38. Slide 38: FelCor's Full-Service Hotel Summary

    FelCor’s Full-Service Hotel Summary 38

  39. Slide 39: FelCor's Full-Service Hotel Summary

    FelCor’s Full-Service Hotel Summary Renaissance Vinoy St Petersburg Hilton Embassy Suites Resort & Golf Club Myrtle Beach Resort Myrtle Beach Oceanfront Resort  Rooms: 361  Rooms: 255  Rooms: 385  2016A RevPAR: $177  2016A RevPAR: $131  2016A RevPAR: $90  2016A Margin: 22.9%  2016A Margin: 2

  40. Slide 40: Non-GAAP Financial Measures

    Non-GAAP Financial Measures 40

  41. Slide 41: Non-GAAP Financial Measures

    Non-GAAP Financial Measures RLJ and FelCor refer in this Investor Presentation to certain non-GAAP financial measures. These measures, including variations of EBITDA and EBITDA margin, are measures of financial performance that are not calculated and presented in accordance with generally accepted a

  42. Slide 42: Non-GAAP Financial Reconciliation – RLJ

    Non-GAAP Financial Reconciliation – RLJ (Figures shown in thousands) For the year ended December 31, 2016 2015 Net income $201,314 $219,812 Depreciation and amortization 162,500 156,226 Interest expense, net 58,793 54,758 Income tax expense (benefit) 8,190 (39,126) Noncontrolling interest in consoli

  43. Slide 43: Non-GAAP Financial Reconciliation – RLJ (cont'd)

    Non-GAAP Financial Reconciliation – RLJ (cont’d) (Figures shown in thousands, except key data) For the year ended For the year ended December 31, 2016 December 31, 2011 (1) Net income $201,314 Net income $11,709 Depreciation and amortization 162,500 Depreciation and amortization 130,714 Distribution

  44. Slide 44: Non-GAAP Financial Reconciliation – FelCor

    Non-GAAP Financial Reconciliation – FelCor Year ended Dec. 31, 2016 Year ended Dec. 31, 2016 ($ in thousands) Traditional 29 Same Store 37 Same Morgans / 35 Same 37 Same Morgans / Full-Service (Compact Store Hotels (1) Royalton Store Hotels Store Hotels (1) Royalton Hotels (2) Full-Service) Net inco

  45. Slide 45: Forward-Looking Statements

    Forward-Looking Statements Certain statements in this presentation that are not in the present or past tense or that discuss the expectations of RLJ Lodging Trust (“RLJ”) and/or FelCor Lodging Trust Incorporated (“FelCor”), and the assumptions upon which those statements are based, are forward-looki

  46. Slide 46: Additional Information

    Additional Information Additional Information about the Proposed Transaction and Where to Find It This communication relates to the proposed merger transaction pursuant to the terms of the Agreement and Plan of Merger, dated as of April 23, 2017, by and among RLJ Lodging Trust (“RLJ”), RLJ Lodging T

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